There’s no doubt that the big investment banks are in a process of de-leveraging. Cutbacks are going to be a necessary step for survival. Goldman has recently become a bank holding company, subjecting themselves to tighter regulatory controls. They’ve also announced they are going to skip high-level executive bonuses this year (Bloomberg story here). Citi just anounced a fairly dramatic reduction in headcount.

Bloomberg is carrying the story: Citigroup Chief Pandit to Reduce Headcount by 50,000:

Citigroup Inc., the U.S. bank with the most employees, plans to eliminate more than 50,000 jobs and cut expenses by 20 percent from their peak as the global economy contracts.

Chief Executive Officer Vikram Pandit intends to reduce headcount by about 14 percent to 300,000 in the “near term,” according to a presentation on the firm’s Web site today. Pandit has already cut 23,000 jobs, leaving the New York-based bank with 352,000 employees as of Sept. 30.

Citigroup slumped 19 percent in New York trading last week and is down 68 percent this year, after four straight quarterly losses totaling $20 billion. The fourth-biggest U.S. bank by market value will probably post a loss of about $187 million for the fourth quarter, analysts surveyed by Bloomberg estimated.

There seems to be a lot of doubt about the move: slimming down while maintaining the old, possibly failed, business model doesn’t seem to be the change that investors are looking for.

This isn’t what’s moving the market today. I think the market is distracted by the auto industry for the moment (for obvious reasons). Still, 50,000 layoffs is nothing to sneeze at. The jobs situation seems to be getting worse, and October was already pretty bad.